France warns Apple and Google of fines over 'abusive trade practices'

French government will take legal action against Google and Apple over "abusive business practices".

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The French government said Wednesday that it would take legal action against Google and Apple over "abusive business practices", threatening fines that could further strain transatlantic ties as a trade war looms. "I believe in an economy based on justice and I will take Google and Apple before the Paris Commercial Court for abusive business practices" against French start-ups, Finance Minister Bruno Le Maire said on RTL radio.

He said in particular that the two US giants imposed financial conditions on French app developers and gathered data on their use, while also saying that "both can unilaterally modify contracts". Technology start-ups are a favorite of French President Emmanuel Macron, who has sought to overhaul the nation's laws and regulations to allow entrepreneurs to flourish.

The action is based on an inquiry by France's anti-fraud office from 2015 to 2017 which uncovered "a significant imbalance" in their relations with French companies, a finance ministry source told AFP. "I consider that Google and Apple, as powerful as they are, shouldn't treat our start-ups and our developers in the way they do today," said Le Maire, calling the situation "unacceptable".

The fraud office urged in its report fines of two million euros ($2.5 million) for each company, the ministry source said, though Le Maire said only that they would be "in the millions of euros". "My responsibility is to ensure economic law and order," he said. "There are rules. There is justice. It should be respected."

Both Apple and Google declined to comment immediately on Le Maire's claims.

Mounting pressure

The action against Apple and Google comes after US President Donald Trump fanned fears of a wider trade war, pledging to impose a 25 percent tariff on imported steel and 10 percent tariff on imports of aluminum. It is unclear if European nations will obtain waivers, especially after Trump singled out the EU as treating the US "very badly" in trade ties and threatening to tax cars as well.

But European officials have said they will not be intimidated by Trump's protectionist moves, with the EU's top trade official, Cecilia Malmstroem, saying this week that "we will stand up to the bullies". France was already pursuing Apple, Google and other US technology giants over the legal strategies that let them route their income from across the EU through low-tax nations.

That leads companies to declare their earnings in countries like Ireland, the Netherlands, and Luxembourg, depriving other member states of revenues even though they may account for a bigger share of the earnings. European officials are preparing to announce an "electroshock" plan for taxing digital economy revenues which would make companies pay a greater share of their taxes in the countries where they earn their profits.